Is the traditional legal career structure about to get an upgrade?

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Every year there are fewer trainee contracts. Coupled with long term trends such as outsourcing, the outcome for legal career structures could be huge.

Recent figures from the 2010 Law Society annual report show a figure in excess of 30,000 law students in 2009-2010 (including first degree and post-graduate LPC courses). Even assuming a proportion of these drop-out, fail their exams or choose alternative careers, that’s an awful lot of people chasing a decreasing number of training contracts.

There were 4,874 registered traineeships to the end of July 2010, compared to 5,809 traineeships in July 2009, which in itself was a decrease of 7.8 per cent on the previous year.

It’s the economy, stupid

Let’s look at why numbers of trainee contracts are going down. Partly of course it’s due to the financial climate, in which firms have been forced to cut many costs, including traineeships.

But this short-term measure will have long-term repercussions. Potentially, it could cause firms to suffer real gaps in senior talent in (hopefully) more prosperous years to come.

Nor will these gaps necessarily be easily fixed by lateral hiring. A recent First Counsel feature, ‘What’s hot and what’s not’, blames recent market conditions for a shortage of mid-level associates and points to a fierce competition for talent as the economy improves.

According to First Counsel, ‘Associates will not move for any role (it must be the right role) and good lawyers at this level have benefitted more than most from any salary increases that have taken place in the past two years.’

The outsourcing factor

Another trend that may turn this short-term recruitment ‘blip’ into a long-term overhaul of career development strategies is that familiar hot potato, legal process outsourcing.

More and more firms, including magic circle firms such as Allen & Overy and Clifford Chance, have shifted aspects of their legal work, such as litigation document review, to lawyers in India. Many critics say that this is just the kind of work that would once have been undertaken by paralegals and trainees onshore.

Doubtless, some of this work reflects a rising amount of basic process-driven work that may never would have been undertaken by trainees (for example, e-discovery).

It’s also possible that if firms offshore more of their process-driven work, trainees may be left with the more interesting and challenging projects.

But where firms are outsourcing work including document review, due diligence and research, one might wonder whether firms really will need as many trainees in future. This is especially the case if, as many commentators believe, the trend to outsource more types of legal work only becomes greater.

This potential to reduce trainee numbers in the long term is attracting entrepreneurial interest too. Acculaw, for instance, is a new company offering a training scheme that aims to cut the costs of traineeships for law firms.

The Solicitors Regulation Authority (SRA) has just backed the model in which Acculaw recruits trainees from postgraduate law school and then seconds them to law firms as and when they’re needed. If successful, this will again lead to law firms significantly cutting back on trainee numbers.

Radical consequences?

Combined, these trends suggest a continued decrease in trainee numbers. For trainees, this could be read negatively. But there may also be very positive outcomes of this shift. Opportunities might include, for instance:

  • Increased competition for fewer trainee places – but with more interesting and challenging work for those trainees that make it
  • More sophisticated and bespoke trainee programmes (resulting from a reduced allocation of ‘grunt’ work to trainees). This will also mean newly qualified lawyers that are better equipped to meet the needs of both the firm and its clients
  • A rise in the number of permanent places offered to a smaller pool of trainees
  • Better compensation packages for newly qualified lawyers, arising out of the increased competition for fresh talent
  • Improved long-term career development and support systems because retaining this valuable talent will become a strategic priority.

The market as a whole may also see the influx of many new businesses such as Acculaw. These companies will meet the additional requirement for contract lawyers who can temporarily fill resource gaps in busier times.And these companies will also attract lawyers who want a different kind of career offering greater flexibility.

For law firms, these trends spell the end of the traditional recruitment model. Unnerving though this may be, with every change there is opportunity – for law firms and lawyers alike.

But the time is now. In this shifting market, the firms that will enjoy long-term recruitment and retention success are already rethinking ways to win this future war for talent. CP

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